3741 / What procedures and notices are required in order for a pension plan to reduce participant benefit levels under the Multiemployer Pension Reform Act of 2014?

In order to reduce benefits, the plan sponsor must first apply to the Secretary of the Treasury. The proposed reduction must then be approved by a vote of the plan participants and union representatives. If the reduction is rejected, however, the Treasury and Department of Labor have the authority to override the negative vote if the plan is determined to be systemically important.¹ A systemically important plan is a plan with respect to which the PBGC projects will increase its liabilities by $1 billion or more if benefit reductions are not made.²

The plan must also provide certain notices to plan participants and beneficiaries that are sufficient to allow the individual to understand the effect of the reduction, including an estimate of the effect on the individual participant or beneficiary. The notice must also include a description of the factors considered in reducing the benefits, a statement that the application for approval will be available on the Secretary of the Treasury website, information on the individual’s rights, a statement describing appointment of a retiree representative (if applicable) and information on how to contact the Treasury for more information.³ See also Q 3739 and Q 3740 for more information.